EX 10.2


     

     

    EXHIBIT
      B

    


    NEITHER
      THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE
      BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
      COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
      THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY,
      MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
      OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
      SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
      AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED
      IN
      CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

    


    Original
      Issue Date: June
      ___, 2008

    Original
      Conversion Price (subject to adjustment herein): $0.35

    


    $_______________

    


    


    ORIGINAL
      ISSUE DISCOUNT

    VARIABLE
      RATE SELF-LIQUIDATING 

    SENIOR
      SECURED CONVERTIBLE DEBENTURE

    DUE
      OCTOBER 1, 2009

    


    THIS
      ORIGINAL ISSUE DISCOUNT VARIABLE RATE SELF-LIQUIDATING SENIOR SECURED
      CONVERTIBLE DEBENTURE is one of a series of duly authorized and validly issued
      Original Issue Discount Variable Rate Self-Liquidating Senior Secured
      Convertible Debentures of Solomon Technologies, Inc., a Delaware corporation
      (the “Company”),
      having its principal place of business at 14 Commerce Drive, Danbury, CT 06810,
      designated as its Original Issue Discount Variable Rate Self-Liquidating Senior
      Secured Convertible Debenture due October 1, 2009 (this debenture, the
“Debenture”
and,
      collectively with the other such series of debentures, the “Debentures”).
      This
      Debenture was issued for an original issue discount. 

    


    FOR
      VALUE
      RECEIVED, the Company promises to pay to ________ or its registered assigns
      (the
“Holder”),
      or
      shall have paid pursuant to the terms hereunder, the principal sum of $_____
      on
      October 1, 2009 (the “Maturity
      Date”)
      or
      such earlier date as this Debenture is required or permitted to be repaid as
      provided hereunder, and to pay interest to the Holder on the aggregate
      unconverted and then outstanding principal amount of this Debenture in
      accordance with the provisions hereof. This Debenture is subject to the
      following additional provisions:


    
      
         

      

      
        
        

        
          

        

      

      
         

      

    


    Section
      1. Definitions.
      For the
      purposes hereof, in addition to the terms defined elsewhere in this Debenture,
      (a) capitalized terms not otherwise defined herein shall have the meanings
      set
      forth in the Purchase Agreement and (b) the following terms shall have the
      following meanings:

    


    “Alternate
      Consideration”
shall
      have the meaning set forth in Section 5(e).

    


    “Bankruptcy
      Event”
means
      any of the following events: (a) the Company or any Significant Subsidiary
      (as
      such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a
      case
      or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Company or any Significant
      Subsidiary thereof, (b) there is commenced against the Company or any
      Significant Subsidiary thereof any such case or proceeding that is not dismissed
      within 60 days after commencement, (c) the Company or any Significant Subsidiary
      thereof is adjudicated insolvent or bankrupt or any order of relief or other
      order approving any such case or proceeding is entered, (d) the Company or
      any
      Significant Subsidiary thereof suffers any appointment of any custodian or
      the
      like for it or any substantial part of its property that is not discharged
      or
      stayed within 60 calendar days after such appointment, (e) the Company or any
      Significant Subsidiary thereof makes a general assignment for the benefit of
      creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting
      of its creditors with a view to arranging a composition, adjustment or
      restructuring of its debts or (g) the Company or any Significant Subsidiary
      thereof, by any act or failure to act, expressly indicates its consent to,
      approval of or acquiescence in any of the foregoing or takes any corporate
      or
      other action for the purpose of effecting any of the foregoing.

    


    “Beneficial
      Ownership Limitation”
shall
      have the meaning set forth in Section 4(c). 

    


    “Business
      Day”
means
      any day except Saturday, Sunday, any day which shall be a federal legal holiday
      in the United States or any day on which banking institutions in the State
      of
      New York are authorized or required by law or other governmental action to
      close.

    


    “Buy-In”
shall
      have the meaning set forth in Section 4(d)(v).

    


    “Change
      of Control Transaction”
means
      the occurrence after the date hereof of any of (i) an acquisition after the
      date
      hereof by an individual or legal entity or “group” (as described in Rule
      13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether
      through legal or beneficial ownership of capital stock of the Company, by
      contract or otherwise) of in excess of 33% of the voting securities of the
      Company (other than by means of conversion or exercise of the Debentures and
      the
      Securities issued together with the Debentures), or (ii) the Company merges
      into
      or consolidates with any other Person, or any Person merges into or consolidates
      with the Company and, after giving effect to such transaction, the stockholders
      of the Company immediately prior to such transaction own less than 66% of the
      aggregate voting power of the


    
      
         

      

      
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    Company
      or the successor entity of such transaction, or (iii) the Company sells or
      transfers all or substantially all of its assets to another Person and the
      stockholders of the Company immediately prior to such transaction own less
      than
      66% of the aggregate voting power of the acquiring entity immediately after
      the
      transaction, or (iv) a replacement at one time or within a three year period
      of
      more than one-half of the members of the Board of Directors which is not
      approved by a majority of those individuals who are members of the Board of
      Directors on the date hereof (or by those individuals who are serving as members
      of the Board of Directors on any date whose nomination to the Board of Directors
      was approved by a majority of the members of the Board of Directors who are
      members on the date hereof), or (v) the execution by the Company of an agreement
      to which the Company is a party or by which it is bound, providing for any
      of
      the events set forth in clauses (i) through (iv) above.

    


    “Conversion”
shall
      have the meaning ascribed to such term in Section 4. 

    


    “Conversion
      Date”
shall
      have the meaning set forth in Section 4(a).

    


    “Conversion
      Price”
shall
      have the meaning set forth in Section 4(b).

    


    “Conversion
      Schedule”
means
      the Conversion Schedule in the form of Schedule
      1
      attached
      hereto. 

    


    “Conversion
      Shares”
means,
      collectively, the shares of Common Stock issuable upon conversion of this
      Debenture in accordance with the terms hereof.

    


    “Debenture
      Register”
shall
      have the meaning set forth in Section 2(c).

    


    “Equity
      Conditions”
means,
      during the period in question, (i) the Company shall have duly honored all
      conversions and redemptions scheduled to occur or occurring by virtue of one
      or
      more Notices of Conversion of the Holder, if any, (ii) the Company shall have
      paid all liquidated damages and other amounts owing to the Holder in respect
      of
      this Debenture, (iii)(a) there is an effective Registration Statement pursuant
      to which the Holder is permitted to utilize the prospectus thereunder to resell
      all of the shares of Common Stock issuable pursuant to the Transaction Documents
      (and the Company believes, in good faith, that such effectiveness will continue
      uninterrupted for the foreseeable future) or (b) all of the Conversion Shares
      issuable pursuant to the Transaction Documents may be resold pursuant to Rule
      144 without volume or manner-of-sale restrictions or current public information
      requirements as determined by the counsel to the Company pursuant to a written
      opinion letter to such effect, addressed and acceptable to the Transfer Agent
      and the Holder, (iv) the Common Stock is trading on a Trading Market and all
      of
      the shares issuable pursuant to the Transaction Documents are listed or quoted
      for trading on such Trading Market (and the Company believes, in good faith,
      that trading of the Common Stock on a Trading Market will continue uninterrupted
      for the foreseeable future), (v) there is a sufficient number of authorized
      but
      unissued and otherwise unreserved shares of Common Stock for the issuance of
      all
      of the shares issuable pursuant to the Transaction Documents, (vi) there is
      no
      existing Event of Default


    
      
         

      

      
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    or
      no
      existing event which, with the passage of time or the giving of notice, would
      constitute an Event of Default, (vii) the issuance of the shares in question
      (or, in the case of an Optional Redemption or Monthly Redemption, the shares
      issuable upon conversion in full of the Optional Redemption Amount or Monthly
      Redemption Amount) to the Holder would not violate the limitations set forth
      in
      Section 4(c) herein, (viii) there has been no public announcement of a pending
      or proposed Fundamental Transaction or Change of Control Transaction that has
      not been consummated, (ix) the Holder is not in possession of any information
      provided by the Company that constitutes, or may constitute, material non-public
      information and (x)
      for
      each Trading Day in a period of 30 consecutive Trading Days prior to the
      applicable date in question, the daily trading volume for the Common Stock
      on
      the principal Trading Market exceeds 100,000 shares per Trading Day (subject
      to
      adjustment for forward and reverse stock splits and the like).

    


    “Event
      of Default”
shall
      have the meaning set forth in Section 8.

    


    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    


    “Fundamental
      Transaction”
shall
      have the meaning set forth in Section 5(e).

     

    “Interest
      Conversion Rate”
means
      95% of the lesser of (a) the average of the VWAPs for the 5 consecutive Trading
      Days ending on the Trading Day that is immediately prior to the applicable
      Interest Payment Date or (b) the average of the VWAPs for the 5 consecutive
      Trading Days ending on the Trading Day that is immediately prior to the date
      the
      applicable Interest Conversion Shares are issued and delivered if after the
      Interest Payment Date.

    


    “Interest
      Conversion Shares”
shall
      have the meaning set forth in Section 2(a).

    


    “Interest
      Notice Period”
shall
      have the meaning set forth in Section 2(a).

     

    “Interest
      Payment Date”
shall
      have the meaning set forth in Section 2(a).

    


    “Interest
      Period”
means,
      initially, the period beginning on and including the Original Issue Date and
      ending on and including June 30, 2008 and each successive period as follows:
      the
      period beginning on and including July 1 and ending on and including September
      30; the period beginning on and including October 1 and ending on and including
      December 31; the
      period beginning on and including January 1 and ending on and including March
      31; the period beginning on and including March 31 and ending on and including
      June 30; and the period beginning on and including June 30 and ending on and
      including September 30.

    


    “Interest
      Share Amount”
shall
      have the meaning set forth in Section 2(a).

    


    “Late
      Fees”
shall
      have the meaning set forth in Section 2(d).


    
      
         

      

      
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    “LIBOR”
means,
      for each Interest Period (i) the six-month London Interbank Offered Rate for
      deposits in U.S. dollars, as shown on the Trading Day immediately prior to
      the
      beginning of such Interest Period in The Wall Street Journal (Eastern Edition)
      under the caption "Money Rates - London Interbank Offered Rates (LIBOR)"; or
      (ii) if The Wall Street Journal does not publish such rate, the offered
      one-month rate for deposits in U.S. dollars which appears on the Reuters Screen
      LIBO Page as of 10:00 a.m., New York time, on the Trading Day immediately prior
      to the beginning of such Interest Period, provided that if at least two rates
      appear on the Reuters Screen LIBO Page on any such Trading Day, the "LIBOR"
      for
      such day shall be the arithmetic mean of such rates.

    


    “Mandatory
      Default Amount”
means
      the sum of (i) the greater of (A) 130% of the outstanding principal amount
      of
      this Debenture, plus all accrued and unpaid interest hereon, or (B) the
      outstanding principal amount of this Debenture, plus all accrued and unpaid
      interest hereon, divided by the Conversion Price on the date the Mandatory
      Default Amount is either (a) demanded (if demand or notice is required to create
      an Event of Default) or otherwise due or (b) paid in full, whichever has a
      lower
      Conversion Price, multiplied by the VWAP on the date the Mandatory Default
      Amount is either (x) demanded or otherwise due or (y) paid in full, whichever
      has a higher VWAP, and (ii) all other amounts, costs, expenses and liquidated
      damages due in respect of this Debenture. Notwithstanding anything herein to
      the
      contrary, if at the applicable time the Holder is able to and there are no
      impediments to convert and immediately resell the Conversion Shares to the
      public pursuant to a Registration Statement or under Rule 144, without (i)
      the
      requirement for the Company to be in compliance with the current public
      information required under Rule 144 and (ii) volume or manner-of-sale
      restrictions, the Mandatory Default Amount shall mean (y) the sum of 130% of
      the
      outstanding principal amount of this Debenture, plus all accrued and unpaid
      interest hereon, and (z) all other amounts, costs, expenses and liquidated
      damages due in respect of this Debenture.

     

    “Monthly
      Redemption”
means
      the redemption of this Debenture pursuant to Section 6(a) hereof. 

     

    “Monthly
      Redemption Amount”
means,
      as to a Monthly Redemption, $______1,
      plus
      accrued but unpaid interest, liquidated damages and any other amounts then
      owing
      to the Holder in respect of this Debenture.

    


    “Monthly
      Redemption Date” means
      the
      1st of each month, commencing on January 1, 2009 and ending upon the full
      redemption of this Debenture.

    


    “Monthly
      Redemption Notice”
shall
      have the meaning set forth in Section 6(a) hereof.

    


    “Monthly
      Redemption Period”
shall
      have the meaning set forth in Section 6(a) hereof.

     

     

     

      
        

      

    

    
      	1	
              1/10
                of the original principal amount.

            


    

    
 

    
      
         

      

      
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    “Monthly
      Redemption Price”
shall
      have the meaning set forth in Section 6(a) hereof. 

    


    “Monthly
      Redemption Share Amount”
shall
      have the meaning set forth in Section 6(a) hereof. 

    


    “Notice
      of Conversion”
shall
      have the meaning set forth in Section 4(a).

    


    “Optional
      Redemption”
shall
      have the meaning set forth in Section 6(b).

    


    “Optional
      Redemption Amount”
means
      the sum of (i) 115% of the principal amount of the Debenture then outstanding
      and subject to redemption, (ii) accrued but unpaid interest on the redeemed
      principal and (iii) all liquidated damages and other amounts due in respect
      of
      the principal amount being redeemed.

    


    “Optional
      Redemption Date”
shall
      have the meaning set forth in Section 6(b).

    


    “Optional
      Redemption Notice”
shall
      have the meaning set forth in Section 6(b).

    


    “Optional
      Redemption Notice Date”
shall
      have the meaning set forth in Section 6(b).

    


    “Original
      Issue Date”
means
      the date of the first issuance of this Debenture, regardless of any transfers
      of
      any portion of this Debenture and regardless of the number of instruments which
      may be issued to evidence this Debenture.

    


    “Permitted
      Indebtedness”
      means (a)
      the
      indebtedness evidenced by the Debentures, (b) the Indebtedness existing on
      the
      Original Issue Date and set forth on Schedule
      3.1(aa)
      attached
      to the Purchase Agreement and any refinancing thereof, (b) lease obligations
      and
      purchase money indebtedness of up to $100,000, in the aggregate, incurred in
      connection with the acquisition of capital assets and lease obligations with
      respect to newly acquired or leased assets, and (c) indebtedness that (i) is
      expressly subordinate to the Debentures pursuant to a written subordination
      agreement with the Purchasers that is acceptable to each Purchaser in its sole
      and absolute discretion and (ii) matures at a date later than the Maturity
      Date.

    


    “Permitted
      Lien”
means
      the individual and collective reference to the following: (a) Liens for taxes,
      assessments and other governmental charges or levies not yet due or Liens for
      taxes, assessments and other governmental charges or levies being contested
      in
      good faith and by appropriate proceedings for which adequate reserves (in the
      good faith judgment of the management of the Company) have been established
      in
      accordance with GAAP; (b) Liens imposed by law which were incurred in the
      ordinary course of the Company’s business, such as carriers’, warehousemen’s and
      mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in
      the ordinary course of the Company’s business, and which (x) do not individually
      or in the aggregate materially detract from the value of such property or assets
      or materially impair the use thereof in the operation of

     


    
      
         

      

      
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    the
      business of the Company and its consolidated Subsidiaries or (y) are being
      contested in good faith by appropriate proceedings, which proceedings have
      the
      effect of preventing for the foreseeable future the forfeiture or sale of the
      property or asset subject to such Lien; (c) Liens incurred in connection with
      Permitted Indebtedness under clause (a) or (d) of the definition thereof; and
      (d) Liens incurred in connection with Permitted Indebtedness under clause (b)
      thereunder, provided that such Liens are not secured by assets of the Company
      or
      its Subsidiaries other than the assets so acquired or leased.

     

    “Person”
means
      an individual or corporation, partnership, trust, incorporated or unincorporated
      association, joint venture, limited liability company, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

    


    “Pre-Redemption
      Conversion Shares”
shall
      have the meaning set forth in Section 6(a) hereof. 

    


    “Purchase
      Agreement”
means
      the Securities Purchase Agreement, dated as of June ___, 2008, among the Company
      and the original Holders, as amended, modified or supplemented from time to
      time
      in accordance with its terms.

    


    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder.

    


    “Share
      Delivery Date”
shall
      have the meaning set forth in Section 4(d).

    


    “Subsidiary”
shall
      have the meaning set forth in the Purchase Agreement.

    


    “Trading
      Day”
means
      a
      day on which the principal Trading Market is open for business.

    


    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the Nasdaq
      Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market,
      the
      New York Stock Exchange or the OTC Bulletin Board.

    


    “Transaction
      Documents”
shall
      have the meaning set forth in the Purchase Agreement.

    


    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time)); (b)  if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      quoted for trading on the OTC Bulletin Board and if


    
      
         

      

      
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    prices
      for the Common Stock are then reported in the “Pink Sheets” published by Pink
      Sheets, LLC (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported; or (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good faith
      by
      the Holder and reasonably acceptable to the Company.

    


    Section
      2. Interest.

     

    a) Payment
      of Interest in Cash or Kind.
      The
      Company shall pay interest to the Holder on the aggregate unconverted and then
      outstanding principal amount of this Debenture at a rate of interest per annum
      equal to the higher of (a) 8.0% or (b) LIBOR during the applicable Interest
      Period plus 2%, payable quarterly on January 1, April 1, July 1 and October
      1,
      beginning on the first such date after the Original Issue Date, on each Monthly
      Redemption Date (as to that principal amount then being redeemed), on each
      Optional Redemption Date (as to that principal amount then being redeemed),
      on
      each Conversion Date (as to that principal amount then being converted) and
      on
      the Maturity Date (each such date, an “Interest
      Payment Date”)
      (if
      any Interest Payment Date is not a Business Day, then the applicable payment
      shall be due on the next succeeding Business Day), in cash or, at the Company’s
      option, in duly authorized, validly issued, fully paid and non-assessable shares
      of Common Stock at the Interest Conversion Rate (the amount in U.S. dollars
      to
      be paid in shares, the “Interest
      Share Amount”)
      or a
      combination thereof; provided,
      however,
      that
      payment in shares of Common Stock may only occur if (i) all of the Equity
      Conditions have been met (unless waived by the Holder in writing) during the
      5
      Trading Days immediately prior to the applicable Interest Payment Date (the
      “Interest
      Notice Period”)
      and
      through and including the date such shares of Common Stock are issued to the
      Holder, (ii) the Company shall have given the Holder notice in accordance with
      the notice requirements set forth below and (iii) as to such Interest Payment
      Date, prior to such Interest Notice Period (but not more than 5 Trading Days
      prior to the commencement of such Interest Notice Period), the Company shall
      have delivered to the Holder’s account with The Depository Trust Company a
      number of shares of Common Stock to be applied against such Interest Share
      Amount equal to the quotient of (x) the applicable Interest Share Amount divided
      by (y) the then Conversion Price (the “Interest
      Conversion Shares”).

     

    b) Company’s
      Election to Pay Interest in Cash or Shares of Common Stock.
      Subject
      to the terms and conditions herein, the decision whether to pay interest
      hereunder in cash, shares of Common Stock or a combination thereof shall be
      at
      the sole discretion of the Company. Prior to the commencement of any Interest
      Notice Period, the Company shall deliver to the Holder a written notice of
      its
      election to pay interest hereunder on the applicable Interest Payment Date
      either in cash, shares of Common Stock or a combination thereof and the Interest
      Share Amount as to the applicable Interest Payment Date, provided that the
      Company may indicate in such notice that the election contained in such notice
      shall apply to future Interest Payment Dates until revised by a subsequent
      notice. During any Interest Notice Period, the Company’s election (whether
      specific to an Interest Payment Date or continuous) shall be irrevocable as
      to
      such Interest Payment


    
      
         

      

      
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    Date.
      Subject to the aforementioned conditions, failure to timely deliver such written
      notice to the Holder shall be deemed an election by the Company to pay the
      interest on such Interest Payment Date in cash. At any time the Company delivers
      a notice to the Holder of its election to pay the interest in shares of Common
      Stock, the Company shall timely file a prospectus supplement pursuant to Rule
      424 disclosing such election. The aggregate number of shares of Common Stock
      otherwise issuable to the Holder on an Interest Payment Date shall be reduced
      by
      the number of Interest Conversion Shares previously issued to the Holder in
      connection with such Interest Payment Date.

    


    c) Interest
      Calculations.
      Interest shall be calculated on the basis of a 360-day year, consisting of
      twelve 30 calendar day periods, and shall accrue daily commencing on the
      Original Issue Date until payment in full of the outstanding principal, together
      with all accrued and unpaid interest, liquidated damages and other amounts
      which
      may become due hereunder, has been made. Payment of interest in shares of Common
      Stock (other than the Interest Conversion Shares issued prior to an Interest
      Notice Period) shall otherwise occur pursuant to Section 4(d)(ii) herein and,
      solely for purposes of the payment of interest in shares, the Interest Payment
      Date shall be deemed the Conversion Date. Interest shall cease to accrue with
      respect to any principal amount converted, provided that the Company actually
      delivers the Conversion Shares within the time period required by Section
      4(d)(ii) herein. Interest hereunder will be paid to the Person in whose name
      this Debenture is registered on the records of the Company regarding
      registration and transfers of this Debenture (the “Debenture
      Register”).
      Except as otherwise provided herein, if at any time the Company pays interest
      partially in cash and partially in shares of Common Stock to the holders of
      the
      Debentures, then such payment of cash shall be distributed ratably among the
      holders of the then-outstanding Debentures based on their (or their
      predecessor’s) initial purchases of Debentures pursuant to the Purchase
      Agreement.

    


    d) Late
      Fee.
      All
      overdue accrued and unpaid interest to be paid hereunder shall entail a late
      fee
      at an interest rate equal to the lesser of 15% per annum or the maximum rate
      permitted by applicable law (“Late
      Fees”)
      which
      shall accrue daily from the date such interest is due hereunder through and
      including the date of actual payment in full. Notwithstanding anything to the
      contrary contained herein, if on any Interest Payment Date the Company has
      elected to pay accrued interest in the form of Common Stock but the Company
      is
      not permitted to pay accrued interest in Common Stock because it fails to
      satisfy the conditions for payment in Common Stock set forth in Section 2(a)
      herein, then, at
      the
      option of the Holder, the
      Company shall pay the regularly scheduled interest payment in cash. If any
      Interest Conversion Shares are issued to the Holder in connection with an
      Interest Payment Date and are not applied against an Interest Share Amount,
      then
      the Holder shall promptly return such excess shares to the Company.

     

    e) Prepayment.
      Except
      as otherwise set forth in this Debenture, the Company may not prepay any portion
      of the principal amount of this Debenture without the prior written consent
      of
      the Holder. 


    
      
         

      

      
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    Section
      3.  Registration
      of Transfers and Exchanges.
      

     

    a) Different
      Denominations.
      This
      Debenture is exchangeable for an equal aggregate principal amount of Debentures
      of different authorized denominations, as requested by the Holder surrendering
      the same. No service charge will be payable for such registration of transfer
      or
      exchange.

     

    b) Investment
      Representations.
      This
      Debenture has been issued subject to certain investment representations of
      the
      original Holder set forth in the Purchase Agreement and may be transferred
      or
      exchanged only in compliance with the Purchase Agreement and applicable federal
      and state securities laws and regulations. 

    


    c) Reliance
      on Debenture Register.
      Prior
      to due presentment for transfer to the Company of this Debenture, the Company
      and any agent of the Company may treat the Person in whose name this Debenture
      is duly registered on the Debenture Register as the owner hereof for the purpose
      of receiving payment as herein provided and for all other purposes, whether
      or
      not this Debenture is overdue, and neither the Company nor any such agent shall
      be affected by notice to the contrary.

    


    Section
      4.  Conversion.

     

    a) Voluntary
      Conversion.
      At any
      time after the Original Issue Date until this Debenture is no longer
      outstanding, this Debenture shall be convertible, in whole or in part, into
      shares of Common Stock at the option of the Holder, at any time and from time
      to
      time (subject to the conversion limitations set forth in Section 4(c)
      hereof). The Holder shall effect conversions by delivering to the Company a
      Notice of Conversion, the form of which is attached hereto as Annex
      A
      (a
“Notice
      of Conversion”),
      specifying therein the principal amount of this Debenture to be converted and
      the date on which such conversion shall be effected (such date, the
“Conversion
      Date”).
      If no
      Conversion Date is specified in a Notice of Conversion, the Conversion Date
      shall be the date that such Notice of Conversion is deemed delivered hereunder.
      To effect conversions hereunder, the Holder shall not be required to physically
      surrender this Debenture to the Company unless the entire principal amount
      of
      this Debenture, plus all accrued and unpaid interest thereon, has been so
      converted. Conversions hereunder shall have the effect of lowering the
      outstanding principal amount of this Debenture in an amount equal to the
      applicable conversion. The Holder and the Company shall maintain records showing
      the principal amount(s) converted and the date of such conversion(s). The
      Company shall deliver an objection to any Notice of Conversion within 1 Business
      Day of delivery of such Notice of Conversion. In the event of any dispute or
      discrepancy, the records of the Company shall be controlling and determinative
      in the absence of manifest error; provided,
      however,
      in the
      event of a dispute the Company shall deliver Conversion Shares to the extent
      that no dispute exists and in the event that the Company is later proved to
      be
      in error the Holder shall have the right to seek all remedies hereunder
      retroactive to the Conversion Date. The
      Holder, and any assignee by acceptance of this Debenture, acknowledge and agree
      that, by reason of the provisions of this


    
      
         

      

      
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    paragraph,
      following conversion of a portion of this Debenture, the unpaid and unconverted
      principal amount of this Debenture may be less than the amount stated on the
      face hereof.

     

    b) Conversion
      Price.
      The
      conversion price in effect on any Conversion Date shall be equal to $0.35
      subject
      to adjustment herein (the “Conversion
      Price”).

    


    c) Holder’s
      Restriction on Conversion.
      The
      Company shall not effect any conversion of this Debenture, and a Holder shall
      not have the right to convert any portion of this Debenture, to the extent
      that
      after giving effect to the conversion set forth on the applicable Notice of
      Conversion, the Holder (together with the Holder’s Affiliates, and any other
      person or entity acting as a group together with the Holder or any of the
      Holder’s Affiliates) would beneficially own in excess of the Beneficial
      Ownership Limitation (as defined below). For purposes of the foregoing sentence,
      the number of shares of Common Stock beneficially owned by the Holder and its
      Affiliates shall include the number of shares of Common Stock issuable upon
      conversion of this Debenture with respect to which such determination is being
      made, but shall exclude the number of shares of Common Stock which are issuable
      upon (A) conversion of the remaining, unconverted principal amount of this
      Debenture beneficially owned by the Holder or any of its Affiliates and (B)
      exercise or conversion of the unexercised or unconverted portion of any other
      securities of the Company subject to a limitation on conversion or exercise
      analogous to the limitation contained herein (including, without limitation,
      any
      other Debentures or the Certificate of Designation) beneficially owned by the
      Holder or any of its Affiliates. Except as set forth in the preceding sentence,
      for purposes of this Section 4(c)(ii), beneficial ownership shall be calculated
      in accordance with Section 13(d) of the Exchange Act and the rules and
      regulations promulgated thereunder. To the extent that the limitation contained
      in this Section 4(c)(ii) applies, the determination of whether this Debenture
      is
      convertible (in relation to other securities owned by the Holder together with
      any Affiliates) and of which principal amount of this Debenture is convertible
      shall be in the sole discretion of the Holder, and the submission of a Notice
      of
      Conversion shall be deemed to be the Holder’s determination of whether this
      Debenture may be converted (in relation to other securities owned by the Holder
      together with any Affiliates) and which principal amount of this Debenture
      is
      convertible, in each case subject to the Beneficial Ownership Limitation. To
      ensure compliance with this restriction, the Holder will be deemed to represent
      to the Company each time it delivers a Notice of Conversion that such Notice
      of
      Conversion has not violated the restrictions set forth in this paragraph and
      the
      Company shall have no obligation to verify or confirm the accuracy of such
      determination. In addition, a determination as to any group status as
      contemplated above shall be determined in accordance with Section 13(d) of
      the
      Exchange Act and the rules and regulations promulgated thereunder. For purposes
      of this Section 4(c)(ii), in determining the number of outstanding shares of
      Common Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as stated in the most recent of the following: (A) the Company’s most
      recent periodic or annual report, as the case may be; (B) a more recent public
      announcement by the Company; or (C) a more recent notice by the Company or
      the
      Company’s transfer agent setting forth the number of shares of Common Stock
      outstanding. Upon the written or oral request of


    
      
         

      

      
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    a
      Holder,
      the Company shall within two Trading Days confirm orally and in writing to
      the
      Holder the number of shares of Common Stock then outstanding. In any case,
      the
      number of outstanding shares of Common Stock shall be determined after giving
      effect to the conversion or exercise of securities of the Company, including
      this Debenture, by the Holder or its Affiliates since the date as of which
      such
      number of outstanding shares of Common Stock was reported. The “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      conversion of this Debenture held by the Holder. The Holder, upon not less
      than
      61 days’ prior notice to the Company, may increase or decrease the Beneficial
      Ownership Limitation provisions of this Section 4(c)(ii), provided that the
      Beneficial Ownership Limitation in no event exceeds 9.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to the
      issuance of shares of Common Stock upon conversion of this Debenture held by
      the
      Holder and the Beneficial Ownership Limitation provisions of this Section
      4(c)(ii) shall continue to apply. Any such increase or decrease will not be
      effective until the 61st day after such notice is delivered to the Company.
      The
      Beneficial Ownership Limitation provisions of this paragraph shall be construed
      and implemented in a manner otherwise than in strict conformity with the terms
      of this Section 4(c)(ii) to correct this paragraph (or any portion hereof)
      which
      may be defective or inconsistent with the intended Beneficial Ownership
      Limitation contained herein or to make changes or supplements necessary or
      desirable to properly give effect to such limitation. The limitations contained
      in this paragraph shall apply to a successor holder of this
      Debenture.

     

    d) Mechanics
      of Conversion.

     

    i. Conversion
      Shares Issuable Upon Conversion of Principal Amount.
      The
      number of Conversion Shares issuable upon a conversion hereunder shall be
      determined by the quotient obtained by dividing (x) the outstanding principal
      amount of this Debenture to be converted by (y) the Conversion
      Price.

     

    ii. Delivery
      of Certificate Upon Conversion.
      Not
      later than three Trading Days after each Conversion Date (the “Share
      Delivery Date”),
      the
      Company shall deliver, or cause to be delivered, to the Holder (A) a certificate
      or certificates representing the Conversion Shares which, on or after the
      earlier of (i) the six month anniversary of the Original Issue Date or (ii)
      the
      Effective Date, shall be free of restrictive legends and trading restrictions
      (other than those which may then be required by the Purchase Agreement)
      representing the number of Conversion Shares being acquired upon the conversion
      of this Debenture (including, if the Company has given continuous notice
      pursuant to Section 2(b) for payment of interest in shares of Common Stock
      at
      least 5 Trading Days prior to the date on which the Notice of Conversion is
      delivered to the Company, shares of Common Stock representing the payment of
      accrued interest otherwise determined pursuant to Section 2(a) but assuming
      that
      the Interest Notice Period

     

     

     

    
 

    
      
         

      

      
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    is
      the 5
      Trading Days period immediately prior to the date on which the Notice of
      Conversion is delivered to the Company and excluding for such issuance the
      condition that the Company deliver Interest Conversion Shares as to such
      interest payment) and (B) a Company check or wire transfer of immediately
      available funds in the amount of accrued and unpaid interest (if the Company
      has
      elected or is required to pay accrued interest in cash). On or after the earlier
      of (i) the six month anniversary of the Original Issue Date or (ii) the
      Effective Date, the Company shall use its best efforts to deliver any
      certificate or certificates required to be delivered by the Company under this
      Section 4 electronically through the Depository Trust Company or another
      established clearing corporation performing similar functions. 

     

    iii. Failure
      to Deliver Certificates.
      If in
      the case of any Notice of Conversion such certificate or certificates are not
      delivered to or as directed by the applicable Holder by the 2nd
      Trading
      Day immediately following the Shares Delivery Date, the Holder shall be entitled
      to elect by written notice to the Company at any time on or before its receipt
      of such certificate or certificates, to rescind such Conversion, in which event
      the Company shall promptly return to the Holder any original Debenture delivered
      to the Company and the Holder shall promptly return to the Company the Common
      Stock certificates representing the principal amount of this Debenture
      unsuccessfully tendered for conversion to the Company. 

     

    iv. Obligation
      Absolute; Partial Liquidated Damages.
      The
      Company’s obligations to issue and deliver the Conversion Shares upon conversion
      of this Debenture in accordance with the terms hereof are absolute and
      unconditional, irrespective of any action or inaction by the Holder to enforce
      the same, any waiver or consent with respect to any provision hereof, the
      recovery of any judgment against any Person or any action to enforce the same,
      or any setoff, counterclaim, recoupment, limitation or termination, or any
      breach or alleged breach by the Holder or any other Person of any obligation
      to
      the Company or any violation or alleged violation of law by the Holder or any
      other Person, and irrespective of any other circumstance which might otherwise
      limit such obligation of the Company to the Holder in connection with the
      issuance of such Conversion Shares; provided,
      however,
      that
      such delivery shall not operate as a waiver by the Company of any such action
      the Company may have against the Holder. In the event the Holder of this
      Debenture shall elect to convert any or all of the outstanding principal amount
      hereof, the Company may not refuse conversion based on any claim that the Holder
      or anyone associated or affiliated with the Holder has been engaged in any
      violation of law, agreement or for any other reason, unless an injunction from
      a
      court, on notice to Holder, restraining and or enjoining conversion of all
      or
      part of this Debenture shall have been sought and obtained, and the Company
      posts a surety bond for the benefit of the Holder in the amount of 150% of
      the
      outstanding principal amount of this Debenture, which is subject to the
      injunction, which bond shall remain in effect until the


    
      
         

      

      
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    completion
      of arbitration/litigation of the underlying dispute and the proceeds of which
      shall be payable to such Holder to the extent it obtains judgment. In the
      absence of such injunction, the Company shall issue Conversion Shares or, if
      applicable, cash, upon a properly noticed conversion. If the Company fails
      for
      any reason to deliver to the Holder such certificate or certificates pursuant
      to
      Section 4(d)(ii) by the fifth Trading Day after the Conversion Date, the Company
      shall pay to such Holder, in cash, as liquidated damages and not as a penalty,
      for each $1000 of principal amount being converted, $10 per Trading Day
      (increasing to $20 per Trading Day on the fifth Trading Day after such
      liquidated damages begin to accrue) for each Trading Day after the 2nd
      Trading
      Day immediately following the Shares Delivery Date until such certificates
      are
      delivered. Nothing herein shall limit a Holder’s right to pursue actual damages
      or declare an Event of Default pursuant to Section 8 hereof for the Company’s
      failure to deliver Conversion Shares within the period specified herein and
      such
      Holder shall have the right to pursue all remedies available to it hereunder,
      at
      law or in equity including, without limitation, a decree of specific performance
      and/or injunctive relief. The exercise of any such rights shall not prohibit
      the
      Holder from seeking to enforce damages pursuant to any other Section hereof
      or
      under applicable law.

     

    v. Compensation
      for Buy-In on Failure to Timely Deliver Certificates Upon
      Conversion.
      In
      addition to any other rights available to the Holder, if the Company fails
      for
      any reason to deliver to the Holder such certificate or certificates by the
      2nd
      Trading
      Day immediately following the Share Delivery Date pursuant to Section 4(d)(ii),
      and if after such Share Delivery Date the Holder is required by its brokerage
      firm to purchase (in an open market transaction or otherwise), or the Holder’s
      brokerage firm otherwise purchases, shares of Common Stock to deliver in
      satisfaction of a sale by such Holder of the Conversion Shares which the Holder
      was entitled to receive upon the conversion relating to such Share Delivery
      Date
      (a “Buy-In”),
      then
      the Company shall (A) pay in cash to the Holder (in addition to any other
      remedies available to or elected by the Holder) the amount by which (x) the
      Holder’s total purchase price (including any brokerage commissions) for the
      Common Stock so purchased exceeds (y) the product of (1) the aggregate number
      of
      shares of Common Stock that such Holder was entitled to receive from the
      conversion at issue multiplied by (2) the actual sale price at which the sell
      order giving rise to such purchase obligation was executed (including any
      brokerage commissions) and (B) at the option of the Holder, either reissue
      (if
      surrendered) this Debenture in a principal amount equal to the principal amount
      of the attempted conversion or deliver to the Holder the number of shares of
      Common Stock that would have been issued if the Company had timely complied
      with
      its delivery requirements under Section 4(d)(ii). For example, if the Holder
      purchases Common Stock having a total purchase price of $11,000 to cover a
      Buy-In with respect to an attempted conversion of this Debenture with respect
      to
      which the actual sale price of the Conversion Shares (including any brokerage
      commissions) giving rise to such


    
      
         

      

      
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    purchase
      obligation was a total of $10,000 under clause (A) of the immediately preceding
      sentence, the Company shall be required to pay the Holder $1,000. The Holder
      shall provide the Company written notice indicating the amounts payable to
      the
      Holder in respect of the Buy-In and, upon request of the Company, evidence
      of
      the amount of such loss. Nothing herein shall limit a Holder’s right to pursue
      any other remedies available to it hereunder, at law or in equity including,
      without limitation, a decree of specific performance and/or injunctive relief
      with respect to the Company’s failure to timely deliver certificates
      representing shares of Common Stock upon conversion of this Debenture as
      required pursuant to the terms hereof.

     

    vi. Reservation
      of Shares Issuable Upon Conversion.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized and unissued shares of Common Stock for the sole purpose of
      issuance upon conversion of this Debenture and payment of interest on this
      Debenture, each as herein provided, free from preemptive rights or any other
      actual contingent purchase rights of Persons other than the Holder (and the
      other holders of the Debentures), not less than such aggregate number of shares
      of the Common Stock as shall (subject to the terms and conditions set forth
      in
      the Purchase Agreement) be issuable (taking into account the adjustments and
      restrictions of Section 5) upon the conversion of the outstanding principal
      amount of this Debenture and payment of interest hereunder. The Company
      covenants that all shares of Common Stock that shall be so issuable shall,
      upon
      issue, be duly authorized, validly issued, fully paid and nonassessable and,
      if
      a Registration Statement is then effective under the Securities Act, shall
      be
      registered for public sale in accordance with such Registration
      Statement.

    


    vii. Fractional
      Shares.
      Upon a
      conversion hereunder the Company shall not be required to issue stock
      certificates representing fractions of shares of Common Stock, but shall instead
      round the fraction to the nearest whole share.

    


    viii. Transfer
      Taxes.
      The
      issuance of certificates for shares of the Common Stock on conversion of this
      Debenture shall be made without charge to the Holder hereof for any documentary
      stamp or similar taxes that may be payable in respect of the issue or delivery
      of such certificates, provided that the Company shall not be required to pay
      any
      tax that may be payable in respect of any transfer involved in the issuance
      and
      delivery of any such certificate upon conversion in a name other than that
      of
      the Holder of this Debenture so converted and the Company shall not be required
      to issue or deliver such certificates unless or until the person or persons
      requesting the issuance thereof shall have paid to the Company the amount of
      such tax or shall have established to the satisfaction of the Company that
      such
      tax has been paid.

    


    Section
      5. Certain
      Adjustments.

     


    
      
         

      

      
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    a) Stock
      Dividends and Stock Splits.
      If the
      Company, at any time while this Debenture is outstanding: (A) pays a stock
      dividend or otherwise makes a distribution or distributions payable in shares
      of
      Common Stock on shares of Common Stock or any Common Stock Equivalents (which,
      for avoidance of doubt, shall not include any shares of Common Stock issued
      by
      the Company upon conversion of, or payment of interest on, the Debentures);
      (B)
      subdivides outstanding shares of Common Stock into a larger number of shares;
      (C) combines (including by way of a reverse stock split) outstanding shares
      of
      Common Stock into a smaller number of shares; or (D) issues, in the event of
      a
      reclassification of shares of the Common Stock, any shares of capital stock
      of
      the Company, then the Conversion Price shall be multiplied by a fraction of
      which the numerator shall be the number of shares of Common Stock (excluding
      any
      treasury shares of the Company) outstanding immediately before such event and
      of
      which the denominator shall be the number of shares of Common Stock outstanding
      immediately after such event. Any adjustment made pursuant to this Section
      shall
      become effective immediately after the record date for the determination of
      stockholders entitled to receive such dividend or distribution and shall become
      effective immediately after the effective date in the case of a subdivision,
      combination or re-classification.

     

    b) [INTENTIONALLY
      DELETED]. 

    


    c) [INTENTIONALLY
      DELETED]. 

     

    d) [INTENTIONALLY
      DELETED]

     

    e) Fundamental
      Transaction.
      If, at
      any time while this Debenture is outstanding, (A) the Company effects any merger
      or consolidation of the Company with or into another Person, (B) the Company
      effects any sale of all or substantially all of its assets in one transaction
      or
      a series of related transactions, (C) any tender offer or exchange offer
      (whether by the Company or another Person) is completed pursuant to which
      holders of Common Stock are permitted to tender or exchange their shares for
      other securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange pursuant
      to which the Common Stock is effectively converted into or exchanged for other
      securities, cash or property (in any such case, a “Fundamental
      Transaction”),
      then,
      upon any subsequent conversion of this Debenture, the Holder shall have the
      right to receive, for each Conversion Share that would have been issuable upon
      such conversion immediately prior to the occurrence of such Fundamental
      Transaction, the same kind and amount of securities, cash or property as it
      would have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of 1 share of Common Stock (the “Alternate
      Consideration”).
      For
      purposes of any such conversion, the determination of the Conversion Price
      shall
      be appropriately adjusted to apply to such Alternate Consideration based on
      the
      amount of Alternate Consideration issuable in respect of 1 share of Common
      Stock
      in such Fundamental Transaction, and the Company shall apportion the Conversion
      Price among the Alternate Consideration in a reasonable manner reflecting the
      relative value of any different components of the


    
      
         

      

      
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    Alternate
      Consideration. If holders of Common Stock are given any choice as to the
      securities, cash or property to be received in a Fundamental Transaction, then
      the Holder shall be given the same choice as to the Alternate Consideration
      it
      receives upon any conversion of this Debenture following such Fundamental
      Transaction. To the extent necessary to effectuate the foregoing provisions,
      any
      successor to the Company or surviving entity in such Fundamental Transaction
      shall issue to the Holder a new debenture consistent with the foregoing
      provisions and evidencing the Holder’s right to convert such debenture into
      Alternate Consideration. The terms of any agreement pursuant to which a
      Fundamental Transaction is effected shall include terms requiring any such
      successor or surviving entity to comply with the provisions of this Section
      5(e)
      and insuring that this Debenture (or any such replacement security) will be
      similarly adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

     

    f) Calculations.
      All
      calculations under this Section 5 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      5,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      any treasury shares of the Company) issued and outstanding.

    


    g) Notice
      to the Holder.

    


    i. Adjustment
      to Conversion Price.
      Whenever the Conversion Price is adjusted pursuant to any provision of this
      Section 5, the Company shall promptly mail to each Holder a notice setting
      forth
      the Conversion Price after such adjustment and setting forth a brief statement
      of the facts requiring such adjustment and basic terms of the dilutive security.
      If the Company enters into a Variable Rate Transaction, despite the prohibition
      thereon in the Purchase Agreement, the Company shall be deemed to have issued
      Common Stock or Common Stock Equivalents at the lowest possible conversion
      price
      at which such securities may be converted or exercised.

     

    ii. Notice
      to Allow Conversion by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock, (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock, (C) the Company shall
      authorize the granting to all holders of the Common Stock of rights or warrants
      to subscribe for or purchase any shares of capital stock of any class or of
      any
      rights, (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property
      or
      (E) the
      Company shall authorize the voluntary or involuntary dissolution, liquidation
      or
      winding up of the affairs of the Company, then, in each case, the Company shall
      cause to be filed at each office or agency maintained for the purpose of
      conversion of this


    
      
         

      

      
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    Debenture,
      and shall cause to be delivered
      to the Holder at its last address as it shall appear upon the Debenture
      Register, at least 10 calendar days prior to the applicable record or effective
      date hereinafter specified, a notice stating (x)
      the
      date on which a record is to be taken for the purpose of such dividend,
      distribution, redemption, rights or warrants, or if a record is not to be taken,
      the date as of which the holders of the Common Stock of record to be entitled
      to
      such dividend, distributions, redemption, rights or warrants are to be
      determined or (y) the date on which such reclassification, consolidation,
      merger, sale, transfer or share exchange is expected to become effective or
      close, and the date as of which it is expected that holders of the Common Stock
      of record shall be entitled to exchange their shares of the Common Stock for
      securities, cash or other property deliverable upon such reclassification,
      consolidation, merger, sale, transfer or share exchange, provided that the
      failure to deliver such notice or any defect therein or in the delivery thereof
      shall not affect the validity of the corporate action required to be specified
      in such notice. The Holder is entitled to convert this Debenture during the
      10-day period commencing on the date of such notice through the effective date
      of the event triggering such notice.

     

    Section
      6. Redemption.

    


    a) Monthly
      Redemption.
      On each
      Monthly Redemption Date, the Company shall redeem the Monthly Redemption Amount
      (such redemption, the “Monthly
      Redemption”).
      The
      Monthly Redemption Amount payable on each Monthly Redemption Date shall be
      paid
      in cash; provided,
      however,
      as to
      any Monthly Redemption and upon 12 Trading Days’ prior written irrevocable
      notice (the “Monthly
      Redemption Notice”),
      in
      lieu of a cash redemption payment the Company may elect to pay all or part
      of a
      Monthly Redemption Amount in Conversion Shares (such amount in U.S. dollars
      to
      be paid on a Monthly Redemption Date in Conversion Shares, the “Monthly
      Redemption Share Amount”)
      based
      on a conversion price equal to 80% of the average of the VWAPs for the 10
      consecutive Trading Days ending on the Trading Day that is immediately prior
      to
      the applicable Monthly Redemption Date (subject to adjustment for any stock
      dividend, stock split, stock combination or other similar event affecting the
      Common Stock during such 10 Trading Day period) (the price calculated during
      the
      10 Trading Day period immediately prior to the Monthly Redemption Date, the
      “Monthly
      Redemption Price”
and
      such 10 Trading Day period, the “Monthly
      Redemption Period”);
      provided,
      further,
      that
      the Company may not pay the Monthly Redemption Amount in Conversion Shares
      unless (y) from the date the Holder receives the duly delivered Monthly
      Redemption Notice through and until the date such Monthly Redemption is paid
      in
      full, the Equity Conditions have been satisfied, unless waived in writing by
      the
      Holder, and (z) as to such Monthly Redemption, prior to such Monthly Redemption
      Period (but not more than 5 Trading Days prior to the commencement of the
      Monthly Redemption Period), the Company shall have delivered to the Holder’s
      account with The Depository Trust Company (the date of such delivery, the
“Pre-Redemption
      Conversion Shares Delivery Date”)
      a
      number of shares of Common Stock to be applied against such Monthly Redemption
      Share Amount equal to the applicable Monthly Redemption Share
      Amount


    
      
         

      

      
        -
          18 -

        
          

        

      

      
         

      

    


    divided
      by 80% of the average of the VWAPs for the 10 consecutive Trading Days
      immediately preceding the Pre-Redemption Conversion Shares Delivery Date (the
      “Pre-Redemption
      Conversion Shares”); provided,
      however,
      with
      respect to clause (y) of this sentence, the Holder has agreed to waive
      subsections (ii), (iii), (vi), (x) of the definition of “Equity Conditions”,
      provided that
      (a)
      the Conversion Shares may be sold by the Holder without volume or manner
      restrictions and counsel to the Company has provided the Holder with an opinion
      addressed to the transfer agent to such effect and acceptable to the transfer
      agent, (b) no Event of Default restricts in any way the Holder’s ability to
      immediately resell the Conversion Shares, and (c) the aggregate trading volume
      of the Common Stock on the Trading Market for the 12 consecutive Trading Days
      immediately prior to the applicable Monthly Redemption Date exceeds
      $150,000.
      The
      Holder may convert, pursuant to Section 4(a), any principal amount of this
      Debenture subject to a Monthly Redemption at any time prior to the date that
      the
      Monthly Redemption Amount, plus accrued but unpaid interest, liquidated damages
      and any other amounts then owing to the Holder are due and paid in full. Unless
      otherwise indicated by the Holder in the applicable Notice of Conversion, any
      principal amount of this Debenture converted during the applicable Monthly
      Redemption Period until the date the Monthly Redemption Amount is paid in full
      shall be first applied to the principal amount subject to the Monthly Redemption
      Amount payable in cash and then to the Monthly Redemption Amount payable in
      Conversion Shares. Any principal amount of this Debenture converted during
      the
      applicable Monthly Conversion Period in excess of the Monthly Redemption Amount
      shall be applied against the last principal amount of this Debenture scheduled
      to be redeemed hereunder, in reverse time order from the Maturity Date;
provided,
      however,
      if any
      such conversion is applied against such Monthly Redemption Amount, the
      Pre-Redemption Conversion Shares, if any were issued in connection with such
      Monthly Redemption or were not already applied to such conversions, shall be
      first applied against such conversion. The Company covenants and agrees that
      it
      will honor all Notices of Conversion tendered up until such amounts are paid
      in
      full. The Company’s determination to pay a Monthly Redemption in cash, shares of
      Common Stock or a combination thereof shall be applied ratably to all of the
      holders of the then outstanding Debentures based on their (or their
      predecessor’s) initial purchases of Debentures pursuant to the Purchase
      Agreement. At any time the Company delivers a notice to the Holder of its
      election to pay the Monthly Redemption Amount in shares of Common Stock, the
      Company shall file a prospectus supplement pursuant to Rule 424 disclosing
      such
      election.

    


    b) Optional
      Redemption at Election of Company.
      Subject
      to the provisions of this Section 6, at any time after the Effective Date,
      the
      Company may deliver a notice to the Holder (an “Optional
      Redemption Notice”
and
      the
      date such notice is deemed delivered hereunder, the “Optional
      Redemption Notice Date”)
      of its
      irrevocable election to redeem some or all of the then outstanding principal
      amount of this Debenture for cash in an amount equal to the Optional Redemption
      Amount on the 12th
      Trading
      Day following the Optional Redemption Notice Date (such date, the “Optional
      Redemption Date”
and
      such redemption, the “Optional
      Redemption”).
      The
      Optional Redemption Amount is payable in full on the Optional Redemption Date.
      The Company may only


    
      
         

      

      
        -
          19 -

        
          

        

      

      
         

      

    


    effect
      an
      Optional Redemption if each of the Equity Conditions shall have been met on
      each
      Trading Day during the period commencing on the Optional Redemption Notice
      Date
      through to the Optional Redemption Date and
      through and including the date payment of the Optional Redemption Amount is
      actually made.
      If any
      of the Equity Conditions shall cease to be satisfied at any time during the
      12
      Trading Day period, then the Holder may elect to nullify the Optional Redemption
      Notice by notice to the Company within 3 Trading Days after the first day on
      which any such Equity Condition has not been met (provided that if, by a
      provision of the Transaction Documents, the Company is obligated to notify
      the
      Holder of the non-existence of an Equity Condition, such notice period shall
      be
      extended to the third Trading Day after proper notice from the Company) in
      which
      case the Optional Redemption Notice shall be null and void, ab initio.
      The
      Company covenants and agrees that it will honor all Notices of Conversion
      tendered from the time of delivery of the Optional Redemption Notice through
      the
      date all amounts owing thereon are paid in full.

    


    c) Redemption
      Procedure.
      The
      payment of cash or, in the case of a Monthly Redemption, the issuance of Common
      Stock if applicable, shall be payable on the Monthly Redemption Date or Optional
      Redemption Date, as the case may be. In the case of a Monthly Redemption, in
      the
      event that the number of Pre-Redemption Conversion Shares exceeds the number
      of
      Conversion Shares required to be issued on the Monthly Redemption Date as set
      forth in Section 6(a), within 3 Trading Days the Holder shall either (i) return
      such excess Pre-Redemption Conversion Shares to the Company for cancellation
      or
      (ii) convert an additional principal amount of this Debenture at the Conversion
      Price to be applied against such excess Pre-Redemption Conversion Shares. If
      any
      portion of the payment pursuant to a Monthly Redemption or Optional Redemption
      shall not be paid by the Company by the applicable due date, interest shall
      accrue thereon at an interest rate equal to the lesser of 15% per annum or
      the
      maximum rate permitted by applicable law until such amount is paid in full.
      Notwithstanding anything herein contained to the contrary, if any portion of
      the
      Optional Redemption Amount or Monthly Redemption Amount, as applicable, remains
      unpaid after such date, the Holder may elect, by written notice to the Company
      given at any time thereafter accompanied by any payments of cash or Common
      Stock
      therefore paid by the Company in respect of such redemption, to invalidate
      such Optional Redemption or Monthly Redemption, ab initio.
      Notwithstanding anything to the contrary in this Section 6, the Company’s
      determination to redeem in cash or its elections under Section 6(a) shall be
      applied ratably among the Holders of Debentures.
      The
      Holder may elect to convert the outstanding principal amount of the Debenture
      subject to redemptions under Sections 6(a) or 6(b) pursuant to Section 4 at
      any
      time prior to actual payment in cash for any redemption under this Section
      6 by
      the delivery of a Notice of Conversion to the Company. 

     

    Section
      7. Negative
      Covenants.
      As long
      as any portion of this Debenture remains outstanding, the Company shall not,
      and
      shall not permit any of its Subsidiaries to, directly or indirectly, except
      with
      the prior written consent of the Agent (as defined in the Security
      Agreement):


    
      
         

      

      
        -
          20 -

        
          

        

      

      
         

      

    


    a) other
      than Permitted Indebtedness, enter into, create, incur, assume, guarantee or
      suffer to exist any indebtedness for borrowed money of any kind, including
      but
      not limited to, a guarantee;

     

    b) other
      than Permitted Liens, enter into, create, incur, assume or suffer to exist
      any
      Liens of any kind, on or with respect to any of its property or assets now
      owned
      or hereafter acquired or any interest therein or any income or profits
      therefrom;

    


    c) amend
      its
      charter documents, including, without limitation, the certificate of
      incorporation and bylaws, in any manner that materially and adversely affects
      any rights of the Holder;

    


    d) repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis
      number
      of shares of its Common Stock or Common Stock Equivalents other than as to
      (a)
      the Conversion Shares or shares of Preferred Stock as permitted or required
      under the Transaction Documents and (b) repurchases of Common Stock or Common
      Stock Equivalents of departing officers and directors of the Company, provided
      that such repurchases shall not exceed an aggregate of $100,000 for all officers
      and directors during the term of this Debenture; 

    


    e) pay
      cash
      dividends or distributions on any equity securities of the Company;

    


    f) enter
      into any transaction with any Affiliate of the Company which would be required
      to be disclosed in any public filing with the Commission, unless such
      transaction is made on an arm’s-length basis and expressly approved by a
      majority of the disinterested directors of the Company (even if less than a
      quorum otherwise required for board approval); or

    


    g) enter
      into any agreement with respect to any of the foregoing.

     

    Section
      8. Events
      of Default.
      

    


    a) “Event
      of Default”
means,
      wherever used herein, any of the following events (whatever the reason for
      such
      event and whether such event shall be voluntary or involuntary or effected
      by
      operation of law or pursuant to any judgment, decree or order of any court,
      or
      any order, rule or regulation of any administrative or governmental
      body):

    


    i. any
      default in the payment of (A) the principal amount of any Debenture or (B)
      interest, liquidated damages and other amounts owing to a Holder on any
      Debenture, as and when the same shall become due and payable (whether on a
      Conversion Date or the Maturity Date or by acceleration or otherwise) which
      default, solely in the case of an interest payment or other default under clause
      (B) above, is not cured within 3 Trading Days;


    
      
         

      

      
        -
          21 -

        
          

        

      

      
         

      

    


     

    ii. the
      Company shall fail to observe or perform any other covenant or agreement
      contained in the Debentures (other than a breach by the Company of its
      obligations to deliver shares of Common Stock to the Holder upon conversion,
      which breach is addressed in clause (xi) below) which failure is not cured,
      if
      possible to cure, within the earlier to occur
      of
(A)
      5
Trading
      Days after notice of such failure sent by the Holder or by any other
      Holder
      and (B)
      10 Trading Days after the Company has become or should have become aware of
      such
      failure;

    


    iii. a
      default
      or event of default (subject to any grace or cure period provided in the
      applicable agreement, document or instrument) shall occur under (A) any of
      the
      Transaction Documents or (B) any other material agreement, lease, document
      or
      instrument to which the Company or any Subsidiary is obligated (and not covered
      by clause (vi) below);

    


    iv. any
      representation
      or warranty made in this Debenture, any other Transaction Documents, any written
      statement pursuant hereto or thereto or any other report, financial statement
      or
      certificate made or delivered to the Holder or any other Holder shall
      be
      untrue or incorrect in any material respect as of the date when made or deemed
      made;

    


    v. the
      Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w)
      of Regulation S-X) shall be subject to a Bankruptcy Event;

     

    vi. the
      Company or any Subsidiary shall default on any of its obligations under any
      mortgage, credit agreement or other facility, indenture agreement, factoring
      agreement or other instrument under which there may be issued, or by which
      there
      may be secured or evidenced, any indebtedness for borrowed money or money due
      under any long term leasing or factoring arrangement that (a) involves an
      obligation greater than $150,000, whether such indebtedness now exists or shall
      hereafter be created, and (b) results in such indebtedness becoming or being
      declared due and payable prior to the date on which it would otherwise become
      due and payable; 

    


    vii. the
      Common Stock shall not be eligible for listing or quotation for trading on
      a
      Trading Market and shall not be eligible to resume listing or quotation for
      trading thereon within five Trading Days;

    


    viii. the
      Company shall be a party to any Change of Control Transaction or Fundamental
      Transaction or shall agree to sell or dispose of all or in excess of 40% of
      its
      assets in one transaction or a series of related transactions (whether or not
      such sale would constitute a Change of Control Transaction);


    
      
         

      

      
        -
          22 -

        
          

        

      

      
         

      

    


    ix. the
      Company shall fail for any reason to deliver certificates to a Holder prior
      to
      the seventh Trading Day after a Conversion Date pursuant to Section 4(d) or
      the
      Company shall provide at any time notice to the Holder, including by way of
      public announcement, of the Company’s intention to not honor requests for
      conversions of any Debentures in accordance with the terms hereof;

    


    x. any
      monetary judgment, writ or similar final process shall be entered or filed
      against the Company, any Subsidiary or any of their respective property or
      other
      assets for more than $50,000, and such judgment, writ or similar final process
      shall remain unvacated, unbonded or unstayed for a period of 45 calendar days;
      or

    


    xi. if
      a
      proper Disclosure Request has been made pursuant to Section 4.6(b) of the
      Purchase Agreement and the Company fails to either (i) make public disclosure
      of
      the information that is the subject of such Disclosure Request in a manner
      consistent with Rule 101(e) of Regulation FD or (ii) provide such Purchaser
      with
      a written statement that the Company does not believe that such information
      is
      material nonpublic information or that it was delivered pursuant to the prior
      request or consent of such Purchaser, in either case within 5 business days
      of
      its receipt of such Disclosure Request.

     

    b) Remedies
      Upon Event of Default.
      If any
      Event of Default occurs, the outstanding principal amount of this Debenture,
      plus accrued but unpaid interest, liquidated damages and other amounts owing
      in
      respect thereof through the date of acceleration, shall become, at the Holder’s
      election, immediately due and payable in cash at the Mandatory Default Amount.
      Commencing 5 days after the occurrence of any Event of Default that results
      in
      the eventual acceleration of this Debenture, the interest rate on this Debenture
      shall accrue at an interest rate equal to the lesser of 15% per annum or the
      maximum rate permitted under applicable law. Upon the payment in full of the
      Mandatory Default Amount, the Holder shall promptly surrender this Debenture
      to
      or as directed by the Company. In connection with such acceleration described
      herein, the Holder need not provide, and the Company hereby waives, any
      presentment, demand, protest or other notice of any kind, and the Holder may
      immediately and without expiration of any grace period enforce any and all
      of
      its rights and remedies hereunder and all other remedies available to it under
      applicable law. Such acceleration may be rescinded and annulled by Holder at
      any
      time prior to payment hereunder and the Holder shall have all rights as a holder
      of the Debenture until such time, if any, as the Holder receives full payment
      pursuant to this Section 8(b). No such rescission or annulment shall affect
      any
      subsequent Event of Default or impair any right consequent thereon.

     

    Section
      9. Miscellaneous.
      

     

    a) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder, including, without limitation, any Notice of


    
      
         

      

      
        -
          23 -

        
          

        

      

      
         

      

    


    Conversion,
      shall be in writing and delivered personally, by facsimile, or sent by a
      nationally recognized overnight courier service, addressed to the Company,
      at
      the address set forth above, facsimile number (203) 797-9285,
      Attention: Peter W. DeVecchis, Jr. or
      such
      other facsimile number or address as the Company may specify for such purpose
      by
      notice to the Holder delivered in accordance with this Section 9(a). Any and
      all
      notices or other communications or deliveries to be provided by the Company
      hereunder shall be in writing and delivered personally, by facsimile, or sent
      by
      a nationally recognized overnight courier service addressed to each Holder
      at
      the facsimile number or address of the Holder appearing on the books of the
      Company, or if no such facsimile number or address appears, at the principal
      place of business of the Holder. Any notice or other communication or deliveries
      hereunder shall be deemed given and effective on the earliest of (i) the date
      of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile number specified on the signature page prior to 5:30 p.m. (New York
      City time), (ii) the date immediately following the date of transmission, if
      such notice or communication is delivered via facsimile at the facsimile number
      specified on the signature page between 5:30 p.m. (New York City time) and
      11:59
      p.m. (New York City time) on any date, (iii) the second Business Day following
      the date of mailing, if sent by nationally recognized overnight courier service
      or (iv) upon actual receipt by the party to whom such notice is required to
      be
      given.

     

    b) Absolute
      Obligation.
      Except
      as expressly provided herein, no provision of this Debenture shall alter or
      impair the obligation of the Company, which is absolute and unconditional,
      to
      pay the principal of, liquidated damages and accrued interest, as applicable,
      on
      this Debenture at the time, place, and rate, and in the coin or currency, herein
      prescribed. This Debenture is a direct debt obligation of the Company. This
      Debenture ranks pari passu
      with all
      other Debentures now or hereafter issued under the terms set forth
      herein.  

     

    c) Lost
      or Mutilated Debenture.
      If this
      Debenture shall be mutilated, lost, stolen or destroyed, the Company shall
      execute and deliver, in exchange and substitution for and upon cancellation
      of a
      mutilated Debenture, or in lieu of or in substitution for a lost, stolen or
      destroyed Debenture, a new Debenture for the principal amount of this Debenture
      so mutilated, lost, stolen or destroyed, but only upon receipt of evidence
      of
      such loss, theft or destruction of such Debenture, and of the ownership hereof,
      reasonably satisfactory to the Company.

    


    d) Governing
      Law; Arbitration.
      This
      Agreement shall be governed by and construed in accordance with the internal
      laws of the State of New York. Any controversy or claim arising out of or
      related to this Debenture or the breach thereof, shall be settled by binding
      arbitration in New York, New York in accordance with the Expedited Procedures
      (Rules 53-57) of the Commercial Arbitration Rules of the American Arbitration
      Association (“AAA”).
      A
      proceeding shall be commenced upon written demand by the Company or Holder
      to
      the other. The arbitrator(s) shall enter a judgment by default against any
      party, which fails or refuses to appear in any properly noticed arbitration
      proceeding. The proceeding shall be conducted by one (1)
      arbitrator,


    
      
         

      

      
        -
          24 -

        
          

        

      

      
         

      

    


    unless
      the amount alleged to be in dispute exceeds two hundred fifty thousand dollars
      ($250,000), in which case three (3) arbitrators shall preside. The arbitrator(s)
      will be chosen by the parties from a list provided by the AAA, and if the
      parties are unable to agree within ten (10) days, the AAA shall select the
      arbitrator(s). The arbitrators must be experts in securities law and financial
      transactions. The arbitrators shall assess costs and expenses of the
      arbitration, including all attorneys’ and experts’ fees, as the arbitrators
      believe is appropriate in light of the merits of the parties’ respective
      positions in the issues in dispute. Each party submits irrevocably to the
      jurisdiction of any state court sitting in New York, New York or to the United
      States District Court sitting in New York, New York for purposes of enforcement
      of any discovery order, judgment or award in connection with such arbitration.
      The award of the arbitrator(s) shall be final and binding upon the parties
      and
      may be enforced in any court having jurisdiction. The arbitration shall be
      held
      in such place as set by the arbitrator(s) in accordance with Rule 55. With
      respect to any arbitration proceeding in accordance with this section, the
      prevailing party’s reasonable attorney’s fees and expenses shall be borne by the
      non-prevailing party.

    


    Although
      the parties, as expressed above, agree that all claims, including claims that
      are equitable in nature, for example specific performance, shall initially
      be
      prosecuted in the binding arbitration procedure outlined above, if the
      arbitration panel dismisses or otherwise fails to entertain any or all of the
      equitable claims asserted by reason of the fact that it lacks jurisdiction,
      power and/or authority to consider such claims and/or direct the remedy
      requested, then, in only that event, will the parties have the right to initiate
      litigation respecting such equitable claims or remedies. The forum for such
      equitable relief shall be in either a state or federal court sitting in New
      York, New York. Each party waives any right to a trial by jury, assuming such
      right exists in an equitable proceeding, and irrevocably submits to the
      jurisdiction of said New York court. New York law shall govern both the
      proceeding as well as the interpretation and construction of this Agreement
      and
      the transaction as a whole.

     

    e) Waiver.
      Any
      waiver by the Company or the Holder of a breach of any provision of this
      Debenture shall not operate as or be construed to be a waiver of any other
      breach of such provision or of any breach of any other provision of this
      Debenture. The failure of the Company or the Holder to insist upon strict
      adherence to any term of this Debenture on one or more occasions shall not
      be
      considered a waiver or deprive that party of the right thereafter to insist
      upon
      strict adherence to that term or any other term of this Debenture. Any waiver
      by
      the Company or the Holder must be in writing.

     

    f) Severability.
      If any
      provision of this Debenture is invalid, illegal or unenforceable, the balance
      of
      this Debenture shall remain in effect, and if any provision is inapplicable
      to
      any Person or circumstance, it shall nevertheless remain applicable to all
      other
      Persons and circumstances. If it shall be found that any interest or other
      amount deemed interest due hereunder violates the applicable law governing
      usury, the applicable rate of interest due hereunder shall automatically be
      lowered to equal the maximum rate of interest permitted under applicable law.
      The Company covenants (to the extent that it


    
      
         

      

      
        -
          25 -

        
          

        

      

      
         

      

    


    may
      lawfully do so) that it shall not at any time insist upon, plead, or in any
      manner whatsoever claim or take the benefit or advantage of, any stay, extension
      or usury law or other law which would prohibit or forgive the Company from
      paying all or any portion of the principal of or interest on this Debenture
      as
      contemplated herein, wherever enacted, now or at any time hereafter in force,
      or
      which may affect the covenants or the performance of this indenture, and the
      Company (to the extent it may lawfully do so) hereby expressly waives all
      benefits or advantage of any such law, and covenants that it will not, by resort
      to any such law, hinder, delay or impeded the execution of any power herein
      granted to the Holder, but will suffer and permit the execution of every such
      as
      though no such law has been enacted.

     

    g) Next
      Business Day.
      Whenever any payment or other obligation hereunder shall be due on a day other
      than a Business Day, such payment shall be made on the next succeeding Business
      Day.

    


    h) Headings.
      The
      headings contained herein are for convenience only, do not constitute a part
      of
      this Debenture and shall not be deemed to limit or affect any of the provisions
      hereof.

    


    i) Assumption. 
      Any successor to the Company or any surviving entity in a Fundamental
      Transaction shall (i) assume, prior to such Fundamental Transaction, all of
      the
      obligations of the Company under this Debenture and the other Transaction
      Documents pursuant to written agreements in form and substance satisfactory
      to
      the Holder (such approval not to be unreasonably withheld or delayed) and (ii)
      issue to the Holder a new debenture of such successor entity evidenced by a
      written instrument substantially similar in form and substance to this
      Debenture, including, without limitation, having a principal amount and interest
      rate equal to the principal amount and the interest rate of this Debenture
      and
      having similar ranking to this Debenture, which shall be satisfactory to the
      Holder (any such approval not to be unreasonably withheld or delayed).  The
      provisions of this Section 9(i) shall apply similarly and equally to successive
      Fundamental Transactions and shall be applied without regard to any limitations
      of this Debenture.

    


    j) Secured
      Obligation.
      The
      obligations of the Company under this Debenture are secured by all assets of
      the
      Company and certain of the Subsidiaries pursuant to the Security Agreement,
      dated as of August 30, 2007, between the Company, certain of the Subsidiaries
      of
      the Company and the Secured Parties (as defined therein).

    


    *********************

     

     

    
      
         

      

      
        -
          26 -

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF, the Company has caused this Debenture to be duly executed
      by a
      duly authorized officer as of the date first above indicated.

    


    


    
      	
              SOLOMON
                TECHNOLOGIES, INC.

            
	 
	
              By: 
                __________________________________________

              Name:
                Peter W. DeVecchis, Jr.

              Title:
                President

            


    

    



    
      
         

      

      
        -
          27 -

        
          

        

      

      
         

      

    


    ANNEX
      A

    


    NOTICE
      OF CONVERSION

     

    The
      undersigned hereby elects to convert principal under the Original Issue Discount
      Variable Rate Self-Liquidating Senior Secured Convertible Debenture due October
      1, 2009 of Solomon Technologies, Inc., a Delaware corporation (the “Company”),
      into
      shares of common stock, par value $0.001 per share (the “Common
      Stock”),
      of
      the Company according to the conditions hereof, as of the date written below.
      If
      shares of Common Stock are to be issued in the name of a person other than
      the
      undersigned, the undersigned will pay all transfer taxes payable with respect
      thereto and is delivering herewith such certificates and opinions as reasonably
      requested by the Company in accordance therewith. No fee will be charged to
      the
      holder for any conversion, except for such transfer taxes, if any.

    


    By
      the
      delivery of this Notice of Conversion the undersigned represents and warrants
      to
      the Company that its ownership of the Common Stock does not exceed the amounts
      specified under Section 4 of this Debenture, as determined in accordance with
      Section 13(d) of the Exchange Act.

    


    The
      undersigned agrees to comply with the prospectus delivery requirements under
      the
      applicable securities laws in connection with any transfer of the aforesaid
      shares of Common Stock. 

    


    Conversion
      calculations:   

    Date
      to
      Effect Conversion:

    


    Principal
      Amount of Debenture to be Converted:

    


    Payment
      of Interest in Common Stock __ yes __ no

    If
      yes,
      $_____ of Interest Accrued on Account of Conversion at Issue.

    Number
      of
      shares of Common Stock to be issued:

    Signature:

    Name:

     

    Address
      for Delivery of Common Stock Certificates:

    


    Or

    


    DWAC
      Instructions:


    
      
         

      

      
        -
          28 -

        
          

        

      

      
         

      

    

     

     

    Schedule
      1

    


    CONVERSION
      SCHEDULE

    


    The
      Original Issue Discount Variable Rate Self-Liquidating Senior Secured
      Convertible Debentures due on October 1, 2009 in the aggregate principal amount
      of $______ are issued by Solomon Technologies, Inc. This Conversion Schedule
      reflects conversions made under Section 4 of the above referenced
      Debenture.

    


    Dated:
      

     

     

    
      	
              Date
                of Conversion

              (or
                for first entry, Original Issue Date)

            	
              Amount
                of Conversion

            	
              Aggregate
                Principal Amount Remaining Subsequent to Conversion

              (or
                original Principal Amount)

            	
              Company
                Attest

            
	   
	    
	   
	     

	     
	  
	   
	  

	
               
                

            	 
	  
	  

	  
	  
	  
	  

	   
	  
	  
	  

	  
	  
	  
	   

	  
	  
	  
	  

	  
	  
	  
	  

	  
	  
	  
	  



    

    


     

    -
      29
      -